Georgia Power accepts Vogtle loan guarantee

Southern Company subsidiary Georgia Power has formally agreed to accept a conditional federal loan guarantee for the construction of two new nuclear units at its Vogtle site.

How Vogtle 3 and 4 are expected to look

In February of this year, Vogtle units 3 and 4 became the first new nuclear power plant construction projects to be offered conditional loan guarantees by the US Department of Energy (DoE). Project partners were given 90 days in which to accept the conditional commitment, on top of which Southern secured a further 30-day extension. The reasons for the extension request are not clear. Georgia Power's acceptance of the guarantee was made on the deadline of the offer's expiry.

The loan guarantees would cover up to 70% of the company's eligible projected costs applying to future borrowings related to the construction of Vogtle 3 and 4, or approximately $3.4 billion. The guarantees are expected to be funded by the Federal Financing Bank. Any guaranteed borrowings would be secured by Georgia Power's 45.7% interest in the two new units. Georgia Power's share of the construction cost is currently forecast to be about $6.1 billion, including $1.7 billion of financing costs to be collected during construction.

Georgia Power's partners in the project are Oglethorpe Power, with a 30% share, and Municipal Electric Authority of Georgia (MEAG) with 22.7%. The City of Dalton holds the remaining share in the new plant. At the same time that its loan guarantee offer was made to Georgia Power, DoE offered Oglethorpe Power and MEAG loan guarantees covering $3.07 billion and $1.8 billion respectively, which the two companies are understood to have accepted already.

Final approval and issuance of the loan guarantees are subject to the project's receipt of a combined construction and operating licence (COL) from the US Nuclear Regulatory Commission (NRC) among other regulatory approvals and conditions. However, the NRC granted an early site permit (ESP) and limited work authorisation for the project in 2009, and site work is already under way for the two Westinghouse AP1000 units, which are scheduled to start up in 2016 and 2017.

DoE loan guarantees have been offered in various areas as well as nuclear to encourage the commercial use of new or significantly improved energy technologies. The federally-backed guarantees are intended to help would-be builders to raise private finance at no cost to the taxpayer; indeed the recipients are charged a fee for the guarantee. Applications from nuclear energy projects were lodged in 2008, with a fee of $200,000 for the first part and $600,000 for the second part. The DoE received 19 initial applications from 17 utilities to support the construction of 14 nuclear power plants involving 21 new reactors of five different designs, plus two applications for enrichment plants. Earlier this year an extra $36 billion in guarantees was added to the $18.5 billion initially announced in 2005 for nuclear power plants and the $2 billion made available to fuel cycle facilities. Areva Enrichment Services was granted a $2 billion loan guarantee for its Eagle Rock enrichment facility in May.